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Section 1031(a) of the Internal Revenue Code (26 U.S.C. § 1031) states the recognition rules for realized gains (or losses) that arise as a result of an exchange of like-kind property held for productive use in trade or business or for investment. It states that none of the realized gain or loss will be recognized at the time of the exchange.
This means, any gain or loss realized by the partnership upon disposition within the time-frame of five years is treated as ordinary gain or loss (Sec. 724(b)). [30] Since inventory and accounts receivable are ordinary income assets in the hands of the taxpayer, they trigger the recognition of ordinary gain upon disposition.
Both the relinquished property and the acquired property must be like-kind, and must be held for business or investment purposes. The sum of assets of each side of the exchange must be equal in value. Taxes on capital gains are not charged upon sale of a property if a qualifying replacement property is acquired. The transaction has to be ...
Property such as real estate and collectibles, including art and antiques, fall under special capital gains rules. These gains specify different and sometimes higher tax rates (discussed below).
Taxable part of a gain resulting from the sale of a Section 1202 qualified small business stock. Net capital gains from the sale of collectibles like coins or art.
A short-term capital gain is a profit on a capital asset you sell within one year of ownership. For example, if you sell a stock and make a $2,000 profit, you would pay a short-term capital gains ...
In U.S. Federal income tax law, recognition is among a series of prerequisites to the manifestation of gains and losses used to determine tax liability. First, in the series for manifesting gain and loss, a taxpayer must "realize" gain and loss. This word "realize" is a term of art that refers to the realization requirement where the taxpayer ...
The Small Business Jobs Act of 2010 exempted taxes on capital gains for angel and venture capital investors on small business stock investments if held for 5 years. It was a temporary measure but was extended through 2011 by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 as a jobs stimulus.